The process of mortgage approval involves a few steps that apply to everyone. Even though it generally takes a long time, there are a few ways to speed up the process. The quicker you close, the less likely things are to go wrong. The following are a few tips that may speed up your approval process.
Have Your Documents Ready
You will need to avail of certain documents to your lender during the mortgage application process. They include your proof of identity, details of your assets, liabilities, income, and expenses. You need to meet certain requirements regardless of the type of loan you need.
Some of the minimum requirements are your credit rating, household income, and assets in the bank. Your lender has to verify the information you provide during mortgage underwriting. You cannot get a loan without verification. If you are on commission or self-employed, your lender may request that you provide two years of federal income tax returns. Otherwise, they may only require a recent pay stub and some W-2s.
You may need recent statements covering your investment, bank, and retirement accounts. You must show the source of your down payment and provide copies of related transactions. They include deposit slips, canceled checks, and transfers where appropriate. If you received a cash gift for your down payment, you need to document it. Compile all the documents you need in advance to close your loan faster.
Double-Check Your Documentation
Check to ensure that you have compiled the appropriate documentation. Having the wrong documentation can be just as bad as not having any at all. Your lender will be looking for specific documents and specific things about them. If you have trouble getting certain documentation, let your lender know about it in advance. Do not assume that you can substitute it for something else.
Paying attention to detail may speed up your application process. If there are mistakes in your paperwork, they may derail your mortgage application. Be careful when filling out the form and ensure that you have provided complete and accurate information.
Preview Your Mortgage Credit Score
Almost one in four consumers have errors on their credit reports. The errors can have a negative effect on your credit score. Detecting errors on your credit report while your loan is in underwriting can slow you down significantly. The team at ExpertMortgageAdvisor.co.uk suggests that you preview your mortgage credit score before you start the application process. Your aim should be to identify and remove any inaccuracies.
Knowing your credit score may help you when shopping around. You can find the best mortgage loan to suit your needs. If, for example, your score is more than 680, you may need to make down payments of 10-20%.
If there is a bad mark on your credit file, it may slow down your application process. Some lenders may reject your application.
Avoid Major Life Changes
The first approval from your mortgage lender is for the initial underwriting. Underwriters need to verify your assets, income, and credit. Once you have been approved as a lender, your lender will order an appraisal that you need to pay for upfront. They will audit most files before closing. They will review your home appraisal, income, assets, employment, credit, and everything else. Many buyers forget about the second approval. If there are material changes in your application details, your lender may need to pull your loan and rewrite it afresh. Material changes include:
- Changing or quitting jobs
- Purchasing a car or other expensive assets
- Applying for new credit cards
- Changing your source of down payment
- Missing payments on an account that reports to credit bureaus
- Making unexpectedly large deposits to your bank account
If you need to make any significant changes, discuss them with your lender first. They may give you tips to minimize disruptions in your application process.
Build Your Down Payment
Take time to build up your down payment before starting the application process. If you have saved a lot for your down payment, you will be more attractive to lenders. A small down payment can be costly in the long run. You need to pay for Private Mortgage Insurance if your down payment is less than 20%. It is an insurance policy to protect your lender in case you fail to repay your mortgage. Do not start the application process until you have saved enough for your down payment.
Remain In Touch With Your Lender
A simple tip to close your loan faster is being available. After submitting your application, you should be available to respond to requests and questions from your lender.
If, for example, you qualify using child support or alimony, your lender will request that you provide them with proof that the money is sent to your account regularly. They may also request a copy of your divorce decree.
If the co-owner of your account is not included in the loan application letter, you may need a letter from them confirming that you can access the entire account. If you are difficult to reach, the application process will be slower than it should be. Mortgage underwriters need you to speed up the process. If you respond fast, you are likely to get priority treatment.
Pay Down Your Debt
Try to eliminate your debt as much as possible before submitting your application for a mortgage loan. Having a few liabilities increases your chances of success. Lenders consider your credit accounts to determine your ability to repay the loan. Debt has a significant impact on your application. It may slow down your application process or make you ineligible for the loan.
Most mortgage lenders are happy to guide you through the application process. They may give you tips to close your loan faster. However, you need to put in effort too. Get all the relevant documentation ready, pay down or eliminate your debt, build your debt, and preview your mortgage credit score. Stay in touch with your lender throughout the process and avoid making significant life changes.